This chapter is from the book

What can an individual like you and families like yours do to protect and grow your wealth, share it with others, enjoy financial security, and build lasting personal and family legacies based on it?

Over the last 25 years, I have learned that effective wealth management has little to do with how much money you have or how you accumulated it. Effective wealth management is much more about how well you manage than it is about how much you manage. The hard lessons that I've learned as a financial industry insider and from managing substantial wealth for my family are the focus of this book and are applicable to anyone willing to meet the challenge of managing wealth. By sharing those lessons, using illustrations from my family's actual experience, I'm certain that you can avoid many of the pitfalls inherent in managing your personal wealth.

Wealth management is about more than investing, though that is an important part. Money, family, and community are invariably bound together. People pay taxes, save, spend, support philanthropic causes, and transfer wealth to their heirs. Successful wealth management involves the integrated and effective management of all these components.

Transitions

Some people build their wealth by saving money a little bit each month and managing it with the goal of having financial security in retirement. Even after years of accumulating financial assets, working with advisors, and experiencing the volatility of financial markets, they are still uncomfortable with how their assets are managed and are looking for better ways to achieve their goals.

Others achieve financial independence in sudden and sometimes difficult and tumultuous ways. Their transitions to wealth are abrupt and often stressful. Some sell a business into which they had poured their entire savings. Some retire with a pension that they are now responsible for managing. Some receive assets as a result of divorce or loss of a spouse. One of the biggest sudden and high-stress circumstances for coming into wealth is the death of a parent. Over the next 50 years, the United States will see the greatest transfer of wealth in its history. Boston College researchers John J. Havens and Paul G. Schervish estimate that, over this period, total bequests to heirs will range from $25 trillion to $65 trillion, or an average of between $500 billion and $1.3 trillion per year.1 In many of these circumstances, people will not be prepared to take on the responsibility of their new wealth, and the event itself will often come as a surprise.

Building wealth and conserving it takes time, and it demands considered action. The key is to not do something prematurely that results in a significant loss of capital. For that reason, resist the impulse to act quickly or to retain outside wealth advisors before you are ready to act. Do your homework first and plan ahead.